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News & Policy

Percentage of Active Workers in Defined Benefit System Continues to Decline, According to New PBGC Pension Insurance Data Book

May 14, 2004

The ratio of active to inactive workers has fallen to roughly 1-to-1 in the defined benefit pension system, down from more than 3.5-to-1 in 1980, according to the latest edition of the Pension Benefit Guaranty Corporation's Pension Insurance Data Book.

In percentage terms, the share of active workers in single-employer pension plans reached an all-time low of 51 percent in 2001, down from 78 percent in 1980. The trend in multiemployer pension plans is the same, with the share of active workers falling to 50 percent in 2001 from 76 percent in 1980. In defined benefit pension plans, inactive workers are either retirees or former employees entitled to a benefit once they retire.

"In a pension system that is fully advance funded, demographic trends are less significant," said PBGC Executive Director Brad Belt. "But when defined benefit plans are underfunded by $400 billion, the declining ratio of active to inactive workers puts additional pressure on the system."

The changing demographics of the defined benefit system are one of the many findings of the Pension Insurance Data Book, an annually updated statistical reference that tracks the experience of PBGC's insurance programs and the defined benefit pension plans they protect. The latest edition of the Data Book also reveals that:

  • The number of standard terminations reached an all-time low of 1,119 in 2003.
  • The PBGC's recent claims experience has been the worst in the Corporation's 30-year history, with $11.2 billion-or 63 percent-of all claims having been filed within the past three years alone.
  • More than 55 percent of the dollar claims against the insurance program-and more than half of all plan terminations-arose from plans less than 50 percent funded. Only $586 million of the $17.6 billion in total claims were from plans with funded ratios of 75 percent or higher.

The Data Book provides researchers, journalists and others interested in the federal pension insurance program with easily accessible, detailed statistics for PBGC's two separate programs covering single-employer and multiemployer plans. For both of PBGC's insurance programs, the book includes graphs and tables on the financial condition of the program, numbers of people and plans protected by the program, the people receiving or eligible to receive benefits from PBGC and the benefits paid to them, claims against the program, and other vital statistics. This year's edition includes 17 new data tables related to the claims experience and to the people receiving benefits under the single-employer program.

The Data Book is available on PBGC's Web site. Single copies of the publication may be obtained by writing to: PBGC Data Book, Suite 240, 1200 K Street NW, Washington, DC 20005-4026. Requests also may be submitted by FAX to (202) 326-4042.

PBGC is a federal corporation created by the Employee Retirement Income Security Act of 1974 to guarantee payment of basic pension benefits earned by workers. Its two insurance programs cover nearly 44.3 million American workers and retirees participating in more than 31,000 private-sector defined benefit pension plans, including some 1,600 multiemployer plans. The agency receives no funds from general tax revenues. Operations are financed largely by insurance premiums paid by companies that sponsor pension plans and investment returns.

As of September 30, 2003, the single-employer program had assets of $34.016 billion and liabilities totaling $45.254 billion, resulting in an accumulated deficit of $11.238 billion. The multiemployer program had assets of $1 billion and liabilities of $1.261 billion, leaving an accumulated year-end deficit of $261 million, the program's first deficit in more than 20 years. During fiscal year 2003, PBGC paid nearly $2.5 billion in benefits to more than 459,000 retirees. By the end of that year, PBGC was responsible for the benefits of 934,000 people, including 100,000 people in multiemployer plans that were receiving financial assistance from PBGC.

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PBGC No. 04-45